Credit Conditions Survey - 2015 Q2

This quarterly survey of banks and building societies is aimed at improving our understanding of trends and developments in credit conditions.

Published on
13 July 2015

The 2015 Q2 survey was conducted between 22 May and 12 June 2015.

Supply

The availability of secured credit to households was reported to have increased slightly in the three months to mid-June 2015. Lenders expected availability to increase slightly over the following three months. Maximum loan to value ratios and loan to income ratios were reported to have been unchanged in Q2.

Lenders reported that the availability of unsecured credit to households was unchanged in 2015 Q2, having increased in most quarters over the past few years. Availability was expected to be unchanged in Q3.

The overall availability of credit to the corporate sector was reported to be unchanged in Q2, but was expected to increase a little in the following three months. The availability of credit to small businesses increased in Q2, with the net percentage balance the highest since 2010 Q3. The availability of credit to medium-sized companies and large corporates was reported to be unchanged.

Demand

Lenders reported that demand for secured lending for house purchase increased significantly in 2015 Q2, having fallen significantly in the previous three quarters.

Demand for credit card lending from households was unchanged in Q2, while demand for other unsecured lending products, such as personal loans, was reported to have increased slightly.

Demand for lending from small businesses increased significantly in Q2, while demand from large corporates also increased and was unchanged for medium-sized companies. Demand was expected to increase for each size of business in Q3.

Loan pricing

Overall spreads on secured lending to households — relative to Bank Rate or the appropriate swap rate — were reported to have narrowed significantly in Q2, and were expected to narrow again over the following three months.

Lenders reported that spreads on other unsecured lending products, such as personal loans, narrowed again in Q2, and were expected to narrow significantly further in Q3. Spreads on credit cards were reported to be unchanged, but lenders reported a significant increase in the length of interest free periods on balance transfers and, to a lesser extent, for purchases.

As in previous quarters, spreads on lending to medium and large companies narrowed significantly in Q2, while spreads for small businesses were unchanged. Lenders expected spreads on lending to medium and large companies to narrow slightly further in Q3.

Defaults

Lenders reported that default rates on secured loans to households fell in 2015 Q2, and were expected to fall again in Q3. Losses given default on secured loans to households fell significantly in Q2, and were expected to fall in Q3.

Default rates and losses given default on credit card lending to households fell in Q2. Default rates on other unsecured lending to households rose in Q2 while losses given default fell slightly.

Default rates on corporate lending fell again in Q2, particularly on lending to small businesses. Losses given default fell in Q2 for businesses of each size.